Harbor Point construction could begin next month

Harbor Point

Algerina Perna / Baltimore Sun

Mayor Stephanie Rawlings-Blake held a press conference after the City Council voted to give final approval to $107 million in tax-increment-financing bonds for Harbor Point, a high-end development. Next to her at left is Bernard C. "Jack" Young, City Council president. At right (in black dress is City Council member Rochelle "Rikki"v Spector. At far left in back row is Michael S. Beatty, president of Beatty Development Group, LLC.

Mayor Stephanie Rawlings-Blake held a press conference after the City Council voted to give final approval to $107 million in tax-increment-financing bonds for Harbor Point, a high-end development. Next to her at left is Bernard C. "Jack" Young, City Council president. At right (in black dress is City Council member Rochelle "Rikki"v Spector. At far left in back row is Michael S. Beatty, president of Beatty Development Group, LLC. (Algerina Perna / Baltimore Sun)

Luke Broadwater, The Baltimore Sun

Construction to convert an old chemical plant site to a glittering waterfront development could begin next month after the Baltimore City Council gave final approval Monday to more than $100 million in taxpayer assistance for the controversial Harbor Point project.

"We want to build a great project that is successful for the whole city," the developer, Michael S. Beatty, said after the vote. "It will create thousands and thousands of jobs." Officials of his firm said they hope to break ground on the project's signature skyscraper — a new regional headquarters for the energy giant Exelon — on Oct. 15.

Council members voted 11-3, with one abstention, to approve $107 million in tax-increment-financing bonds despite months of protests, objections from downtown business leaders and a late effort by community groups, activists and unions to amend the legislation.

Council members Carl Stokes, Sharon Green Middleton and Bill Henry voted against the deal. Councilwoman Mary Pat Clarke abstained, citing her husband's business relationship with Beatty.

Both Middleton and Stokes lamented what they said was a rushed process that did not fully answer questions and criticism of the subsidy. The tax increment financing is part of about $400 million in public subsidies for the project.

"The process was cut short," Middleton said, referring to a finance committee hearing that Stokes claims was "hijacked" by City Council President Bernard C. "Jack" Young. "There were questions about safety. There's a lot of questions that still need to be answered, and I didn't get those answers."

After the vote, Young denied that the subsidy had been rushed through the council. He said he listened carefully to citizens' concerns.

"This process has been vetted more than any project that has ever come before this council. We heard everybody loud and clear," he said. Young added that he supports the development "100 percent" because of the jobs it is projected to create. "If we get people working, we see less crime. We'll see families united."

In addition to Exelon, Harbor Point will be home to a Morgan Stanley facility, other office buildings, residential towers, parks, stores and a hotel, officials say.

"There's been a lot of misinformation out about Harbor Point, but the facts could not be clearer," said Mayor Stephanie Rawlings-Blake. "It is a catalytic project. It is a smart investment that is going to create jobs and spur more development."

With tax increment financing, the bond sale proceeds are used for improvements — in this case the parks and some infrastructure — and future property taxes generated by the development are used to pay off the bonds.

Under the plan, Beatty's Harbor Point Development Group will spend $59 million of the bond money to build five small parks, $21 million on a promenade, and $10 million on a bridge extending Central Avenue. The legislation requires the developer to give $2 million of the funds to a nearby charter school, the Crossroads. About $15 million will pay for infrastructure improvements along the development's streets and piers.

The largely vacant Harbor Point site is assessed now at $10 million, but the Baltimore Development Corp. projects it will be valued at $1.8 billion for tax purposes when the development is completed years from now.

Supporters say that once fully built, the project will contribute about $20 million a year in increased property taxes to the city's budget, which could be used for schools, roads, police and other projects.

Opponents say that tax increment financing deprives the city's general fund of the increased property tax revenue. They say it's risky and amounts to corporate welfare.

Beatty said only about one-tenth of the development's funding will come from the taxpayers, and that money will be recouped through increased property taxes from the site. He said $920 million of the project's funding will come from private investors.

After criticism that the project would do nothing to benefit low-income Baltimore residents, Beatty pledged to give $3 million to the city's fund for low-income housing. City officials say it will be the largest contribution in the history of the fund, which helps developers build affordable housing. Beatty also agreed to voluntarily follow the city's new local hiring ordinance — pledging to hire 51 percent of new workers for the project from Baltimore — even though the bill does not become law until next year.

But to some in Baltimore, the debate over Harbor Point presented an existential question for the city's future: Are we going to be a city that funnels tax dollars into waterfront development? Or are we going focus on neighborhoods?

"It's disappointing the administration has been so unwilling to listen to the concerns that were raised," said Roxie Herbekian, president of the local branch of UNITE HERE, an international union that represents workers in the hospitality industry. "There's a bigger issue around development and what interests the city administration is focused on that, frankly, has the working class people in town really concerned."

Rawlings-Blake said it's possible to develop both the city's neighborhoods and the waterfront.

"It's not one or the other. It's one Baltimore," she said.

City Councilman James B. Kraft, whose district includes Harbor Point, said he wants to turn his focus toward environmental and traffic concerns presented by the project.

"Now that the emotionalism is set aside, we can really get into those areas," he said.

Soil and groundwater at the site are riddled with toxic chromium entombed beneath a "cap" up to 5 feet thick of clean soil, plastic, clay and gravel, according to government records. Workers will have to create a series of temporary openings in the cap to drive more than 1,000 pilings deep into the ground to support the building. They will dig through the clean dirt on top and peel back the plastic liner to expose contaminated soil beneath.

The developer and state and federal agencies have scheduled a public meeting at 5 p.m. Wednesday at the Morgan Stanley building to present plans for the Exelon project and take questions.

In a news conference after the vote, Rawlings-Blake thanked Young for showing "an incredible amount of leadership." Celebrating the legislative victory, the mayor pledged more development in the years ahead.